Two foreign mining companies, YaraDalolBv and Circum Minerals, conceded to surrender their mining licenses in Ethiopia to the government, if they do not start production within the stipulated time frame.
The two companies individually received large-scale mining licenses in 2017 after a decision by the Council of Ministers was reached, and the companies signed a separate agreement with the Ministry of Mines, to develop potassium in Afar and export their output.
However, the two companies did not undergo any project development for the past four years since they were licensed in 2017.
As a result, they received repeated written warnings and recently, the Minister of Mines, Takele Uma, met with the management of the companies and issued a final verbal warning and set a deadline to start production, sources said.
According to sources close to the matter, the companies have sent a letter stating that they will heed the warnings and recommendations given by the Minister and accept the deadline given to them.
The Reporter reviewed the letters sent by the two companies and confirmed that both agreed to return their mining licenses, if they did not start production.
“On behalf of the board of directors of Circum Minerals Ltd, I can confirm that as per the directions given on the meetings of 4 November, 5 November 2021 and 17 December 2021, we hereby accept that we will surrender our license rights should we not be able to start production of Potash on or before 7 April 2026,” Ian Stalker, director and CEO of Circum Minerals stated in his letter sent to the Ministry of Mining of Ethiopia on December 23, 2021.
Circum acquired the license for the Danakil potash reserve, located in the Danakil area of Afar region. The license provides the company an exclusive access to over the 4.9 billion tons of NI 43-101 compliant potassium resource, contained within the 365 Sq.km area for an initial period of 20 years.
YaraBv is the other license holder, which has also failed to start productions. Takele held a meeting with an official from the company on November 12, 2021, where he conveyed a final warning, the source said.
Immediately after the meeting with the Minister, the company’s board chairman, Jorgen Magnus Stenvold sent an official letter to the Ministry, agreeing to the conditions set, the source said.
“We would like to thank you for taking time to discuss our project and work program on 12 November. As per your direction given in the meeting, we hereby accept to surrender our license right should we not be able to start production of potash on or before December 2025,” Stenvold stated in his letter sent to the Ministry on November 12, 2021.
YaraDallol is a subsidiary of Yara International, a giant Norwegian fertilizer producer that has been supplying fertilizer to Ethiopia for the past three decades.
The planned YaraDallol mine will have a production capacity of approximately 600,000 metric tons of SOP per year, equivalent to approximately ten percent of the global market.
“Our mineral resources should not be left undeveloped. Thus, we have started taking measures against those companies that have delayed development projects,” Takele told The Reporter, adding “We will continue to strengthen this measure.”
